Valid Thoughts on the Concept of Fiduciary Duty

Good Morning Ladies and Gentlemen

«The1930s depression was wide, deep, and prolonged because there was no international lender of last resort.»
(The World in Depression, 1929-1939, Charles Kindelberger)

Valid thoughts on the concept of fiduciary duty

In his latest edition of the «Seasonal Reflections», my partner Hans elaborates on his trip to the U.S. and some of his experiences. Let me briefly quote him for what I consider sensible, simple and remarkable thoughts. I do not want this to be too political, yet politics play an essential role in financial markets and must be considered.

Quote

«Perhaps, it is just another sign of what is wrong with our system of governance. Democracy is about the fair and equitable representation of voters‘ interests. However, politics increasingly seem to have degenerated to the preferred career path for bureaucrats and opportunists, whose primary focus is on keeping the competition at bay to secure re-election rather than what is best for the long-term fate of the electorate. In business, particularly the financial sector, we apply the concept of fiduciary duty, but politicians still get away with baseless promises and empty claims of having the best interest of their electorate at heart. There is no need to prove this objectively and no real accountability. Furthermore, with no skin in the game, the taxpayer’s money is usually squandered on short-term measures designed to increase (re-)election chances, while all Western democracies are put ever deeper into debt. Where is the sustainability in that?»

Seasonal reflections

My partner Hans is a seasoned portfolio manager. He is calm and long-term oriented, and he manages the Incrementum flagship fund, the «Incrementum All Seasons Fund» (Incrementum All Seasons Fund – Incrementum). Regularly, he writes his «seasonal reflections» for our investors in the fund and other interested parties. So if after the above quote, you feel like reading just some more, I have included this link to the current edition of it. Please take a look: Seasonal Reflections (2023 / 02).

Bank of America May 2023 survey

The key message of the May 2023 Bank of America survey is that investors remain bearish. With cash levels at 5.6%, bond allocation at a 14-year high, and bull & bear indicator at 3.4 (bearish). For the last 15 months, the fund managers‘ cash balance has exceeded the 5 per cent mark. This is a historically long period, and only one period was more extended; the 32 months in the bear market from 2000 to 2002. The participating fund managers identify a credit crisis combined with a global recession as the most significant risk. In the second place, they mention the risk of central banks remaining restrictive due to a stubbornly high inflation rate.

Personal conclusion

The negative sentiment among professional and private investors, high bond allocations and high cash levels have already anticipated a market collapse, at least to some degree. Yet, so much bad news seems priced in, and markets are still not going down significantly. Interesting, no?

Ladies and Gentlemen, please share your opinion with me, but please remember (instead of hitting the reply button) to send your messages to:
smk@incrementum.li.

Many thanks, indeed!

I wish you an excellent start to the day and a wonderful weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li